August 17 2015

elb2Vale – Paul-Andre Jacot

It is with deep regret that I note the passing Friday night of the man who was the Swiss Futures & Options Association for many years, Paul-Andre Jacot. I have placed a brief Obituary in our Premium Section. On account of my involvement including my lengthy spell as a board member of SFOA, it is not behind the paywall and may be accessed by anybody interested here.

The funeral will take place this Thursday, August 20, 2015 at 14:00 in the Protestant church of Satigny. Alas, while I was fortunate to be able to attend the funeral of Paul-Andre’s Father some years back I will not be able to make this event. Profound condolences to Paul-Andre’s family. A unique character, he will be missed.

Doubtless we will be raising a glass in Paul-Andre’s memory at this year’s Burgenstock Conference.

Public Markets

PSE H1 2015 Results

vs H1 2014: net income P366.84 mln (USD 7.93 mln), down 35.7%, total revenues P651.54 mln (USD 14.08 mln) down 28.4%.

PLY: Disappointing numbers. However apparently the deal for the bond exchange is happening…


‘Flash Crash’ Trader Freed On Bail

Navinder Singh Sarao successfully argued he could not access bail of £5.05m because his assets had been frozen.

PLY: In that epic Kafka-esque ‘double bluff’ I mentioned Friday it seems suddenly the hound recalled a few tens of millions he had in a Swiss account and now it seems he can stay in Hounslow until extradition time with a handy sum available to his defence as well.

Read our Premium The Kennel – Premium discussion of the “Hound of Hounslow”.


Supreme Court Orders FTIL To Transfer IEX Shares In Escrow Account
Shreeja Sen – Livemint

The court on 2 July had stayed the Central Electricity Regulatory Commission’s (CERC’s) 26 June order asking FTIL to transfer the share to a separate trust demat account. A bench headed by justice Ranjan Gogoi said that FTIL would not have any voting rights or corporate benefits on the modification of the order against its 26% stake in IEX which it was to divest per a CERC direction of 13 May 2014.

On 19 June, FTIL had entered into a share-purchase agreement with several entities, including DCB Power Ventures Ltd and Aditya Birla Private Equity, to sell a 16.6% stake in IEX for Rs.357.06 crore.

Read our Premium IEX India Sale and FTIL Stakes Sales Brief.


Making ITG’s Secret Dark-Pool Trading Desk Even Murkier
Matt Levine – BloombergView

Project Omega used customer order information to trade ahead of customers and capture a risk-free profit. Two things I said about this were:

  • It was so illegal, and
  • It was pretty close to things that are totally legal.

I want to expand a bit on that last point. There’s something weird about how the SEC describes Project Omega’s strategy.

PLY: A brilliant column – today’s must read. Matt Levine breaks the story down and assesses what is a very very murky case of minor differences which through a market maker butterfly effect eventually cost ITG 20 million dollars.

More about ITG settlement with SEC here & Read our Premium post: “ITG, Dark Fines & A Coalition for Change.


BM&FBovespa Sees Brazil To Suffer If Interest On Equity Incentive Scrapped


A Green Light Doesn’t Mean Go For Swaps Clearing (subscription)
Financial News

EC nod just the first step for post-crisis derivatives reforms in Europe.


Esma Seeks Power To Ban Directors & Levy Supersize Fines (subscription)
Financial News

Europe’s top markets regulator is asking for sweeping new powers, including the ability to make spot checks on finance firms without approval from a judge, levy fines 10 times bigger than at present, and banning people from the boards of the firms it directly regulates.

PLY: Interesting extension of powers sought by a regulator which is, at best, currently borderline on being able to cover its existing workload (according to its own submissions). How to end that impasse of underfunding? Well, presumably those massive fine bounties are intended to help…but then if you have to fine to get sufficient staff to be a good regulator, doesn’t that have a whiff of conflict of interest about it?

Private Markets

SunGard’s 10-year Squeeze

Ten years after the consortium paid $11 billion  for Sungard — several years longer than buyout guys and their clients, including Pennsylvania’s state pension funds, like to wait for their profits — SunGard’s main financial-software business group, whose sales have been flat and profits negligible to negative under private-equity control, was sold last week to Fidelity National Information Services for about $5 billion in cash and stock and $4 billion in assumed debt.

Was it worth the expense and the drag on SunGard’s once-healthy prospects?

Read our Premium SunGard IPO Preps & Final Deal Brief.

PLY: An interesting juxtaposition. Sungard is the first of the old line dinosaur vendors to find itself exposed in a brave new world of speedy finance as opposed to borderline analogue vendors who spent more talking about STP in their lengthy histories than actually delivering it to clients… I am not sure the owners were to blame for the atrophying of Sungard’s business but they did make an error with the investment per se.


BIST, Pakistan’s PMEX Sign MoU
Dan DeFrancesco – Waters Technology

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX and FTIL flat to slightly positive.

NSEL-FTIL Merger Sub Judice, Can’t Specify Timeline, Says Centre
R. Srivats – The Hindu Business Line


FTIL Hires APCO Affiliate For PR
N Sundaresha Subramanian  – Business Standard

Read our Premium NSEL-FTIL Merger Brief and NSEL Scandal Brief – Part 16.


The Next Stock Market Shutdown Could Be Much Worse (subscription)
Hal Scott & John Gulliver – Wall Street Journal

The three-hour shutdown of NYSE last month made headlines worldwide.

PLY: Summertime and the going is easy enough to enable folks to write about SIP worries which wouldn’t usually garner the headlines…


Aquis Exchange To Start Trading Top Spanish Stocks (subscription)
Financial News


Thailand Futures Exchange (TFEX) Ready For Rubber Trading RSS3 Futures In Q4


Investing: The Index Factor (subscription)
John Authers – Financial Times

Career Paths

Commissioner Mark P. Wetjen announced his resignation from CFTC, effective August 28, 2015.

Statement Of CFTC Chairman Timothy G. Massad On The Resignation Of Commissioner Mark P. Wetjen

LeapRate reports that Sal Provenzano and Alberto Mellone have joined as Senior Institutional Salespersons in Gain Capital’s institutional FX business GTX.

PLY: Is this a new ploy by forex brokers, trying to appear less alpha by making their sales team gender neutral? Political correctness reaching forex is a remarkable moment.

Ontario Securities Commission (OSC) appointed D. Grant Vingoe as Vice-Chairman to the OSC for a two year term, effective August 12, 2015.

Financial Calendar

This week

19.08 – NZX H1 2015 Financial Results

20.08 – ASX Full-Year 2015 Results

20.08 – Record date Thomson Reuters $0.335 quarterly dividend

21.08 – Record date TMX $0.40 dividend

21.08 – Record date BGC Partners’ BoD $0.12 dividend

All forthcoming exchange / investment related events are now listed in our Events page.

Analyst Notes

DB1 Downgraded By Zacks From “Hold” To “Sell”

A full table of current analysis can be found on our Analyst Ratings page which is updated daily.

Other stories

Hong Kong’s SFC Issues Q1 Report

The Securities and Futures Commission (SFC) published its Quarterly Report summarising key developments from April to June 2015.

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